Indian retail investors have shown an increasing interest in foreign stocks specially US markets over the past decade. But, now what makes the investing process across geographies easier are platforms that allow them to invest directly in the US stock market.
These platforms make it easy for investors to invest in popular US stocks like Facebook, Apple, Amazon, Netflix, Google, Microsoft commonly called FAANG+M stocks.
Axis Securities, ICICI securities, Matertrust, Winvesta, Vested Finance are some of the broking platforms that have recently launched global investing services.
With these platforms, investors get easy access to diverse asset classes like global stocks, global bonds, REITs, and treasury bonds.
Viram Shah, CEO and Co-Founder, Vested Finance said: “There has always been a demand for global stocks from India. Largely because we are consumers of a lot of global companies. What has happened now is that due to technological advancements Indians have easy and cost-effective options to invest in the international markets. One of the big game changers is the ability to invest in fractions. So now one can start investing even with $1 and buy shares of their favorite companies.”
Why are Indians investing in foreign markets?
Few experts say that the reason behind Indians wanting to invest in foreign stocks is that they have now become more aware and are realizing the importance of having a geographically diversified portfolio for a long term wealth creation.
B Gopkumar, MD & CEO, Axis Securities said: “Indian investors have been predominantly leveraging the benefit of having a well-diversified portfolio across three main pillars, namely asset class, industry, and time. However, a fourth and an important pillar that has been steadily gaining traction over the last few years is portfolio diversification across geographies, mainly because it takes away the risk of ‘a single country, a single currency’ portfolio. They want to invest in marquee companies globally and own shares of brands that they know and use on a day-to-day basis. As per the official dataset released by RBI, there is a favorable tailwind observed for portfolio investments overseas under LRS (S0001).”
Who to invest?
To invest one needs to go to the website of these broking platforms or download their application. The next step is to open a brokerage account in the US. This requires answering certain questions and providing a government ID (Eg. PAN card) and an address proof. Post that USD will be transferred into their account.
Shah further said: “Under RBI’s liberalised remittance scheme, one can legally transfer up to $250,000 abroad every year. The transfer would need to happen through an Indian bank. Once the USD is in once can buy and sell commission-free. They can hold the USD in their account as cash as well. When they want to bring the money back, one can put in a withdrawal request and the funds will be transferred back to their Indian bank account.”
These platforms offer a basic plan and a premium plan. By paying fees under the premium plan, investors can get access to additional services. For instance, the Axis Securities premium plan allows zero account opening fees, zero brokerage, and one-year free withdrawal benefits. WinVista provides a bigger list of stocks and ETFs to choose from and invest in. Their premium customers also get to invest in the international multi-currency account and thematic investments.
Swastik Nigam, Co-founder and CEO, Winvesta said: “Our platform comes with no significant upfront costs, annual tie-ins, or minimum thresholds.”
Further, Gopkumar said that right from account opening, broking, portfolio monitoring, and statements, everything happens digitally and it’s a hassle-free process for investors.
“Through curated investment portfolios, theme-based baskets, and research advisory, this platform makes international investing simple and helps investors to make the right decisions. Investors can now directly invest in the US stocks and several multi-asset class portfolios. With a completely digital on-boarding and fund transfer process, we make the entire investment journey smooth and hassle-free for our investors. Now with just a few clicks, Indian investors can seamlessly access global capital markets and build a more powerful, geographically diversified portfolio,” he added.
An alternate way of investing
Investors who do not want to invest through these apps may opt for the Mutual Fund route. “If you don’t wish to invest in a third-party app you can do so through mutual funds. For eg. Nippon India US Equity Opportunities Fund, ICICI Prudential US Bluechip Equity Fund, etc.,” Nigam added.